Credit card lending has seen its biggest fall since records began, Bank of England statistics showed today.
Net lending on cards fell by £311m last month, compared to a £117m increase during July. It is the first fall since May 1994 when credit card lending went down by £35m.
Prior to the announcement, the largest fall recorded was in August 1993 when credit card lending fell by £38m. Today's news follows reports which indicated that Britons are struggling to keep on top of their finances.
Debt in Britain is estimated to account for a third of all unsecured debt in Western Europe, while the average Briton owes more than £3,000. Increased credit card fees and consumer debt are likely to have contributed to the fall in lending figures.
UK economist at Capital Economics Vicky Redwood puts the slump down to a combination of reasons. "People are finding it harder to get credit in the first place as banks have tightened up their lending criteria.
"People also want to borrow less because of the high levels of debt they may already have." In addition, part of the fall could be down to people repaying more off their credit card debt, she added.
November's expected rise in interest rates – the second of the year – could have a knock-on effect on credit card lending, with homeowners shying away from taking on greater unsecured debt to focus on repaying increased mortgage rates. Miss Redwood added: "We have had ten years of strong credit growth. We could now see a few years of sluggish credit card lending."